ProPhase Labs, Inc. (NASDAQ: PRPH,
www.ProPhaseLabs.com) today reported its financial results for the
three and nine months ended September 30, 2018. Net sales from
continuing operations were $2.4 million for the three months ended
September 30, 2018 as compared to net sales from continuing
operations of $3.0 million for the three months ended September 30,
2017. The Company incurred a net loss for the three months ended
September 30, 2018, of $897,000, or ($0.08) per share, compared to
a net loss of $472,000, or ($0.03) per share, for the three months
ended September 30, 2017.
Results for the third quarter of 2018 compared
to the third quarter of 2017 principally reflect the net effect of
(i) a decrease in net sales of $601,000, (ii) an increase in sales
and marketing costs of $245,000 and (iii) an increase in research
and development expenses of $84,000.
The Company generated net sales from continuing
operations for the nine months ended September 30, 2018 of $9.0
million, as compared to $5.7 million for the nine months ended
September 30, 2017. The Company incurred a net loss from continuing
operations for the nine months ended September 30, 2018 of $1.1
million or ($0.10) per share, compared to a net loss from
continuing operations of $2.1 million, or ($0.13) per share, for
the nine months ended September 30, 2017.
The financial results for the nine months ended
September 30, 2018 as compared to the nine months ended September
30, 2017 reflect the net effect of (i) an increase in net sales of
$3.3 million, (ii) an increase in sales and marketing expenses of
$316,000 and (iii) an increase in administration expenditures of
$37,000.
The Company realized net loss from discontinued
operations of $160,000, or ($0.01) for the nine months ended
September 30, 2018 and a net income from discontinued operations
for the nine months ended September 30, 2017, of $42.9 million, or
$2.58 per share. As a result of the sale of the Cold-EEZE®
Business, for the nine months ended September 30, 2017, the Company
has classified as discontinued operations the (i) gain from the
sale of the Cold-EEZE® Business, (ii) all gains and losses
attributable to the Cold-EEZE® Business and (iii) the income tax
expense attributed to the sale of the Cold-EEZE® Business.
The Company continues to own and operate its
manufacturing facility and manufacturing business in Lebanon,
Pennsylvania, and its headquarters in Doylestown, Pennsylvania. As
part of the sale of the Cold-EEZE® Business, the company entered
into a manufacturing agreement to supply various Cold-EEZE® lozenge
products to Mylan. In addition, we produces over-the-counter drug
and dietary supplement lozenges and other products for other third
party customers. The Company is also pursuing a series of new
product development and pre-commercialization initiatives in the
dietary supplement category.
Ted Karkus, the CEO of the Company, stated: “We
are on track with the development of ProPhase Digital Media
(“PDM”), the digital marketing division of the Company. We are
close to completion of the testing phase to optimize results for
digital distribution of our lead product, Legendz XL®. If our model
proves successful, our goal is for PDM to market our other
internally developed products and ultimately market other
companies’ products as well.”
Mr. Karkus continued, “In addition to digital
distribution, we continue to ship our new dietary supplement,
Legendz XL®, to a major retail drug chain and other retailers.
Implementation of our dietary supplement strategy will require
significant investment in marketing as well as significant
additional distribution within the various retail channels and
e-commerce venues in order to achieve a successful launch and build
a successful new product line. We are optimistic but cannot assure
that other major retail chains will carry Legendz XL®.”
Mr. Karkus also noted, “We continue to own and
operate our Pharmaloz manufacturing facility which manufactures and
supplies Cold-EEZE® lozenges to Mylan as well as lozenges to other
companies on a contract manufacturing basis. Manufacturing revenue
fluctuates from quarter to quarter. Also, marketing and
distribution expenses may increase as we build our consumer
products businesses. Therefore, the Company’s results are likely to
continue to fluctuate from quarter to quarter.”
Mr. Karkus concluded, “Looking forward, in
addition to developing our consumer products businesses and growing
our manufacturing business, the Company continues to seek
development stage acquisitions in the consumer products industry as
well as in other sectors and industries, including cyber security,
internet of things and blockchain technologies.”
About the Company
ProPhase is a vertically integrated
manufacturer, marketer and distributor of a diversified range of
over-the-counter (“OTC”) dietary supplements. We are engaged in the
research and development of additional OTC dietary supplements,
including Legendz XL®, which are marketed under our TK Supplements
brand. The Company is also developing ProPhase Digital Media as a
service that leverages and applies technology to the
direct-to-consumer marketing of consumer products. With our
enhanced liquidity following the sale of our Cold-EEZE brand, we
are also actively exploring additional opportunities outside of the
consumer products industry. For more information visit us at
www.ProPhaseLabs.com.
Forward Looking Statements
All statements contained in this press release,
other than statements of historical fact, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act, including statements relating to the launch of our new
line of TK Supplements® and our new product Legendz XL®, our
development efforts with respect to our digital marketing business,
and our exploration of other potential business opportunities.
Forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results to
differ materially from those projected in our forward-looking
statements. These risks and uncertainties include, but are not
limited to: the difficulty of predicting the acceptance and demand
for our products and services, the impact of competitive products
and services and pricing, costs involved in the manufacture and
marketing of products, the timely development and launch of new
products, and other risk factors listed from time to time in our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any
subsequent SEC filings. The forward-looking statements included in
this press release speak only as of the date of this press release
and are based on our current plans and expectations. Management
believes that these forward-looking statements are reasonable as
and when made. Except as required by applicable law or regulation,
we do not undertake any obligation to update our forward-looking
statements to reflect future events or circumstances.
PROPHASE LABS, INC. &
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share
amounts)(unaudited)
|
|
For the Three Months ended |
|
|
For the Nine Months ended |
|
|
|
September 30, 2018 |
|
|
September 30, 2017 |
|
|
September 30, 2018 |
|
|
September 30, 2017 |
|
Net sales |
|
$ |
2,439 |
|
|
$ |
3,040 |
|
|
$ |
9,033 |
|
|
$ |
5,716 |
|
Cost of sales |
|
|
1,683 |
|
|
|
2,608 |
|
|
|
5,593 |
|
|
|
5,060 |
|
Gross profit |
|
|
756 |
|
|
|
432 |
|
|
|
3,440 |
|
|
|
656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
395 |
|
|
|
150 |
|
|
|
802 |
|
|
|
486 |
|
Administration |
|
|
1,129 |
|
|
|
1,124 |
|
|
|
3,547 |
|
|
|
3,510 |
|
Research and development |
|
|
144 |
|
|
|
60 |
|
|
|
319 |
|
|
|
318 |
|
Total operating
expenses |
|
|
1,668 |
|
|
|
1,334 |
|
|
|
4,668 |
|
|
|
4,314 |
|
Loss from
operations |
|
|
(912 |
) |
|
|
(902 |
) |
|
|
(1,228 |
) |
|
|
(3,658 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net |
|
|
15 |
|
|
|
125 |
|
|
|
115 |
|
|
|
72 |
|
Other income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
150 |
|
Loss from continuing
operations before income taxes |
|
|
(897 |
) |
|
|
(777 |
) |
|
|
(1,113 |
) |
|
|
(3,436 |
) |
Income tax benefit from
continuing operations |
|
|
- |
|
|
|
305 |
|
|
|
- |
|
|
|
1,322 |
|
Loss from continuing
operations |
|
|
(897 |
) |
|
|
(472 |
) |
|
|
(1,113 |
) |
|
|
(2,114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
530 |
|
Gain (loss) on sale of discontinued operations, net of
taxes |
|
|
(160 |
) |
|
|
(305 |
) |
|
|
(160 |
) |
|
|
42,389 |
|
Income (loss) from
discontinued operations |
|
|
(160 |
) |
|
|
(305 |
) |
|
|
(160 |
) |
|
|
42,919 |
|
Net income
(loss) |
|
$ |
(1,057 |
) |
|
$ |
(777 |
) |
|
$ |
(1,273 |
) |
|
$ |
40,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on marketable securities |
|
|
28 |
|
|
|
(35 |
) |
|
|
54 |
|
|
|
(35 |
) |
Total comprehensive
income (loss) |
|
$ |
(1,029 |
) |
|
$ |
(812 |
) |
|
$ |
(1,219 |
) |
|
$ |
40,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(0.08 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.13 |
) |
Income (loss) from discontinued continued operations |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
2.58 |
|
Net
income (loss) |
|
$ |
(0.09 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
|
$ |
2.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(0.08 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.12 |
) |
Income (loss) from discontinued continued operations |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
2.51 |
|
Net
income (loss) |
|
$ |
(0.09 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
11,541 |
|
|
|
15,967 |
|
|
|
11,344 |
|
|
|
16,661 |
|
Diluted |
|
|
11,541 |
|
|
|
15,967 |
|
|
|
11,344 |
|
|
|
17,118 |
|
PROPHASE LABS, INC. &
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
DATA(in thousands)
|
|
September 30, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(unaudited) |
|
|
|
|
Cash and cash
equivalents |
|
$ |
2,269 |
|
|
$ |
3,173 |
|
Marketable securities,
available for sale |
|
$ |
6,866 |
|
|
$ |
18,765 |
|
Accounts receivable,
net |
|
$ |
1,051 |
|
|
$ |
1,945 |
|
Inventory |
|
$ |
2,717 |
|
|
$ |
1,531 |
|
Total current assets
|
|
$ |
18,096 |
|
|
$ |
28,417 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
20,575 |
|
|
$ |
33,659 |
|
|
|
|
|
|
|
|
|
|
Total current
liabilities |
|
$ |
876 |
|
|
$ |
1,812 |
|
Total stockholders'
equity |
|
$ |
19,699 |
|
|
$ |
31,847 |
|
Investor ContactTed Karkus, Chairman and
CEOProPhase Labs, Inc.(267) 880-1111
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